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Equities might enjoy all the glory at the moment but watch out for credit. This techno-laggard of the financial markets is set for an electronic great leap forward. If proof were needed - even the venerable CBOT has been showing interest. Antony Currie logs on.

Ten years after the Japanese stock market suffered its dramatic plunge, following a decade in which the Japanese economic model - with its corporate cross-shareholdings, scandal-ridden financial sector, and notorious convoy system which prevents well-managed companies from outperforming the bad - has been pilloried, Japanese equity markets are suddenly soaring.

In the run-up to the European single currency there were expectations of major political changes that might take place after monetary union leading to more decentralized funding, with local authorities and regions issuing more and sovereigns less. Generally in the eurozone this change has been slow in coming. Spain is a key test case. Any significant increase in debt issuance by local authorities may hinge on political horse-trading between the central government and the "fast-track" autonomous regions.

"Unreal city," wrote TS Eliot about London in his 1922 poem The Wasteland. If London induced feelings of bewilderment in Eliot one struggles to imagine what he might have thought about Washington DC. Between M Street in Georgetown and Independence Avenue on Capitol Hill are a couple of square miles into which many of the world's most rarefied institutions are concentrated. Here decisions are taken with resounding affects both across the US and the world. Yet the institutions are cocooned from the actualities over which they preside. There is an air of unreality about majestic Washington.

The figures are alarming. A worldwide survey by Standard & Poor's shows that 55 rated companies failed in the first half of 1999, defaulting on total debts of $20.5 billion. That easily exceeds the 37 failures and $8.3 billion in defaulted debts in the second half of 1998, when the rising default trend began. What's worrying is that, while common sense and historical data teach that the level and volatility of default rates rises in a recession, the US is in anything but that.

The emerging markets are bouncing back - at least some of them are. While they do, the market is holding its breath as crisis-hit countries implement fiscal and monetary reforms. And while economists believe growth rates will improve, they are also resigned to sovereign defaults on foreign debt. Commentary by Rebecca Cicolecchia, research by Alexa Marx.

by David Roche

Emerging market bond investors have up to now been extraordinarily ill-served by the index compilers. Only JP Morgan has made a concerted effort to provide a benchmark index to track emerging market debt, and its Emerging Market Bond Index (EMBI) and EMBI+ have as a result become the market standards.

As the risk of a round of sovereign bond rescheduling looms, bondholders are dusting off the documentation to see what it says. By Christopher Stoakes

A handful of US congressmen have the IMF and World Bank at their mercy. When it comes to fresh capital or even the subject of US withdrawal, these are the guys who have the casting vote, with a mind to their own re-election. Some, like congressman Sonny Callahan, chairman of the House foreign operations committee, are more supportive than others, who'd prefer the IMF to be shut down and the third world left to market forces. The US Treasury and others with a less parochial view have to tread tortuous paths through Senate and House committees to push through the administration's foreign policy. The multilateral institutions have hung back from lobbying on Capitol Hill, but one day it could be a matter of survival. Brian Caplen reports.

World Bank guarantees are a new way to help crisis-hit countries back into the private capital markets. But the Bank still wants to lend money. James Smalhout reports

The great and the good have come up with a seven-point plan to stave off financial crises and benefit the developing world. Are they building castles in the air or laying the basis of a new financial architecture? James Smalhout reports